Delta, United have discussed combining

November 14, 2007

ATLANTA (AP) -- Shares of Delta Air Lines rose about nine percent and United Airlines stock surged 12 percent today after reports of merger talks between the second- and third-largest carriers in the U.S.

The Associated Press learned that the airlines have been discussing a combination that would keep the United name and the corporate headquarters in Chicago.

An official familiar with the talks said there is a sense of urgency in the discussions, which have been going on for some time and continued as recently as a week or so ago.

The exact financial details are not clear. But the official said possibilities include Delta's Atlanta hub being an operational center for the two carriers and Delta CEO Richard Anderson being the chief of the combined airline.

The official -- speaking on condition of anonymity -- said Delta also has had talks with other airlines, but did not specify which airline or the status of the talks.

Shares of Delta rose $1.65 to $20.40 in afternoon trading. Shares of United gained $5.31, to $48.81.

Delta said in a statement today that its board has established a special committee to work with management to review and analyze strategic options for the airline.

The company is responding to pressure by a hedge fund that owns 7 million Delta shares to consider combining with United. Pardus Capital Management also owned owned 5.6 million shares of United as of September 30th.

Robert Mann, an airline consultant, said United's broad Pacific network and Delta's huge Atlantic presence would complement each other. But he said combining fleet information systems and labor could pose challenges.

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